NPM 079-2014

Requesting Entity: Philippine Postal Corporation (PhilPost)

Issues Concern: Purposes of Corporations under the Articles of Incorporation



Whether a bidder, engaged in a courier service, may participate in the procurement of Polyethylene Plastic Envelopes

The best proof of a corporation's purpose is embodied in its Articles of Incorporation (AI) and By-Laws. The AI must state the primary and secondary purposes of the corporation. A corporation has no power except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence.


[A] prospective bidder's business as stated in the Mayor's Permit should allow it to legally engage in identified business/ endeavor within the City or Municipality where it has its principal place of business. In the case of Acebedo Optical Company, Inc. v. the Court of Appeals, et al., the Supreme Court held that "a business permit authorizes the person, natural or otherwise, to engage in business or some form of commercial activity."

Consequently, it is necessary for the BAC to determine whether the Mayor's Permit issued to the company authorizes it to engage in the business of supplying/ selling Various Polyethylene Plastic Envelopes, or merely confined in the courier service business.

Whether it is mandatory for a winning bidder under the Negotiated Procurement (Two-Failed Biddings) to post a performance security

[A]s a rule, performance and warranty securities are required except for procurement under Sections 52 (Shopping), 53.2 (Emergency Cases), 53.5 (Agency-to-Agency). 53.9 (Small Value Procurement), 53.10 (Lease of Real Property), 53.12 (Community Participation), and 53.13 (UN Agencies).

Negotiated Procurement under the two-failed bidding modality is not one of the exceptions to the requirements of posting of performance and warranty securities. Thus, it is a mandatory requirement for the winning bidder to post the required Performance Security for procurement employing the negotiated mode under two-failed biddings.